Against real estate ownership
 

Owning real estate in this county is replete with geopolitical risk, the cost of ownership (including tax) will only get more odious, and the opportunity cost for the capital warrants renting or an alternate arrangement.

1) Geopolitical risk

a) Eminent domain - what more need be said
b) Civil forfeiture - has been more broadly applied as of late
c) Strategic blunder - having an illiquid asset in this country hinders one's mobility. It becomes an excuse to stick around when one would be better served to flee. Furthermore, if one had to abandon property, one opens one's self up to adverse possession claims, and it will be a huge chunk of money that one cannot use to start a new life.

2) Cost of ownership

a) The rule of thumb is that the cost of maintaining a house averages roughly 2%/yr. Expect this to increase as real estate depreciates in real terms, and the cost of raw materials increases.
b) Property taxes - state and local regimes have become more desperate and are easy targets for states to pass on budget cuts. Property tax is seen as progressive because the ownership of real property is seen as a sign of wealth. Why paint one's self as a target?

3) Opportunity cost of capital

Even if real estate were somehow to miraculously hold its nominal value, the opportunity cost of doing so will likely be odious as inflation ravages the economy. Furthermore, in an illiquid market such as real estate, there might not even be a bid at any given time, so even if one were to decide to liquidate, it could be years before one has a cheque in hand.

This country is pretty much fucked, so act accordingly. As I told my parents: anyone who doesn't cash out and jump ship does not deserve a red cent in remittances.

Real estate is just a form of estate.

Estate ... In Latin, it is called status, because it signifies the condition or circumstances in which the owner stands with regard to his property. OWNER, property. The owner is he who has dominion of a thing real or person-al, corporeal or incorporeal, which he has a right to enjoy and to do with as he pleases, even to spoil or destroy it, as far as the law permits, unless he be prevented by some agreement or covenant which restrains his right.

http://www.oed.com/view/Entry/238664...m=real+estate&

Property consisting of land and the buildings on it You might as soon go to reading chicken bones and tea leaves as to try to understand law from any current books.

Property consists of land? What is land? Land is a geographic SHAPE, a volume, that extends to the center of the earth and to the heavens above. It is not dirt. It is not mineral. It is not water, liquids or gas. It contains those things, much like a person is considered a container of rights and duties.

That is what you do, like clockwork.

Ahh, I see you prefer to be ignorant. Don't let me stand in your way.

Here is a hypothetical for you Skirnir,

Buy a house for 85,000 in put 2000.00 down, property taxes and insurance are approx 1600 a year, Rent it out for 850 to 900 a month, mortgage payment of 500 a month, the bank holds the note but you receive monthly income, and in the end you would own the property. I don't think selling would be wise in any event because once the note is paid off, you'll have all of the income.

I am not against that kind of real estate ownership.


As far as eminent domain and all the other things you mentioned, sometimes you just got to take a chance.... and if you ended up losing the property for some reason, not much sweat off your back cause you haven't invested hardly any of your money into it, and you've been receiving money every month .

I hate to break up this love fest between you two. I rarely fully understand palani, but I find him to be fascinating character and highly intelligent. Most everything he says goes beyond my head, and I always wish he'd speak "to his audience" . . . but nevertheless. I will not be discussing legal terms with you, Skirnir_, but rather what I thought was your OP's intent.

1) You are right about geopolitical risk.
2) You are right about cost of ownership.
3) You are partially right about opportunity cost of capital. Most of my objections to your statements on this one are about intrinsic value. Some things are difficult to put a $value on.

- I have awesome neighbors. Some who I consider to be family, and even better than some of my family. (How lucky am I?) Having been a renter, and having known plenty of renters . . . you just don't get a sense of community when renting, in my opinion. No one wants to invest time and energy getting to know someone that will be gone in 1 year.
- My neighborhood is small and tight-knit. We ALL know each other, and we all know the vehicles that belong here. I don't want to sound (or be) too cocky, but I think if the time came, we could defend this place for a little while or more. I am not the only armed person here, but I can lend a few arms if need be. http://www.discussworldissues.com/fo...ies/smiley.gif Plus, my neighborhood is surrounded by an alligator-filled moat. For real. I have known land owners that share a similar type of neighborhood, even if that neighborhood was dozens of miles in circumference.
- I can travel easily by water or rail if I need to escape (not just roads).

If it weren't for the special circumstances, I would say that renting is the way to go, particularly if you're not a handyman (or know someone who is). I wish I could go back to renting, when someone else fixed the septic, well, roof, air conditioner, etc.

OK, I might be discussing legal terms with you. What I don't understand is this statement:

This is what I found is the definition of "remittance":

A remittance is a transfer of money by a foreign worker to his or her home country. I don't deserve a red cent that I were to transfer if I were a foreign worker to my home country? Sorry, tell me what you mean as a remittance, if this is not what you meant. I don't mean to seem daft, I just am sometimes.

I took it to mean that I don't deserve a bailout, and I agree. I won't be asking for one.

Oh yeah, I forgot to mention gambling. We're all gambling, whether it's on gold, silver, stocks, bonds, dollars, euros, guilders (gulden), real estate . . . it's all diversification of assets. It's all gambling to some extent.

I venture to guess that Trolzkirnir doesn't even have a fucking job which makes it easy to make such broad statements. Trolzkirnir have you gone full circle and now become a Bolshevik jew?

For an $85k house, maintenance would be $1,7k, likely more because tenants have no incentive to not cause wear and tear. Also, mortgages usually require 20% down, or $17k here.

I did run the mortgages for a 15 and 30 year note at 3% and 3,6% and the note is much closer to $200/mo incl. 2% taxes and insurance. Arbitraging the rental even at 800/mo would be $5,6k/yr, or about a 33% return on the down payment before taxes.

However, the above is all static accounting, and a bit myopic. It assumes a 0% vacancy rate, & that the tenant pays on time and does not brazen things out in the courts. Everything is worth what the buyer will pay for it, including rentals. As economic conditions deteriorate, net household destruction ensues as households merge and economise, which tend to depress rents paid in already-depreciating dollars.

There is also the matter of geopolitical risk. Obongo just slapped a 3,8% tax on net rental incomes, and the proceeds are taxable at one's tax bracket. Compare to gold that can (still) be liquidated for cash and whose income is not reported.

Still, that is a rather interesting business model. Why not replicate it in a more stable jurisdiction? Doing that here sounds like renting out a lawn chair on a sinking ship.

Quoted for archival as a personal attack.

LMAO, like I give a fuck your taking notes. You just being here is a personal attack on the forum.

1253

LOL Sorry Skinir,

I posted that hypothetical situation because I know lots of people here are a hell of alot smarter then me, some people are book smart and can run numbers, and some people are just tenacious and take chances here and there.

I think I fall into the latter category, I would say yep your right, and just shut up. http://www.discussworldissues.com/fo...ies/smiley.gif edited

Hasn't it always been the case that single people rent, whereas couples buy houses? When you've got a family, that's the time to put roots down and hold your ground. Children are like little investments that mature in 20 years, with the payoff hopefully much greater than the cost.

If you are single and purchase property, you're simply tying yourself down unless you are in a unique situation.

No apology was required; you sufficiently communicated the idea, I just crunched the numbers to see if it passed muster. However, if what you say is true, then perhaps I was more dismissive than was warranted, though past performance is not a guarantor of the future.

I didn't know they offered mortgages with so little money down; was this during the bubble?

At this juncture, I have started to view things as thumbscrews, in that they can be turned to exert control, and the slower the better. Housing is one of them: complying with some odious regulation XYZ often costs less than the hit one would take if one sold the damn thing and was done with it. Same with driving - instead of kowtowing to the insurance weasels and tax collectors, I sold the car.

It is likely a pre-existing cultural bias.

Bingo! Found myself one time in life with a mortgage, single, and mowing lawns on my Sat. day off, when I should have been out exploring. Asking myself, what the heck am I doing? Never again. No point in putting roots down when you are single and free. Life is dynamic, the only constant...is change. A 30 year fixed is pretty damn constant and a person can easily become a slave to what they claim to own.

Oh and another thing, about the taxes and Ins. Skinir, you never want them wrapped up in your loan or the monthly payment, pay them separately so the money you do pay for the mortgage actually pays principal and interest, you'll pay the house off sooner.

1996


Though past performance is not a guarantor of the future. I agree.

Circumstances and luck, see my signature line.

If you could sell the car and the house, then you must live in a pack em and stack em zombie mausoleum, so you can walk to the pizza, the 7-11 and the fema bus. Or maybe it's "what I'd really like to do is to borrow the car keys, and see ya later, can I have them please?"

Edited:

And as I hung up the phone, it occurred to me, my kid was a fucking sheeple
He'd grown into a fucking sheep.........